A Project Report

On

“A STUDY OF FINANCIAL PLANNING OF INDIVIDUAL ASSESSES”

SUBMITTED TO

SAVITRIBAI PHULE PUNE UNIVERSITY

In partial fulfillment of the requirement for the award of

MASTER IN BUSINESS ADMINISTRATION

SUBMITTED BY

POOJA BHARAT SURADKAR

MBA (Marketing)

UNDER THE GUIDENCE OF

PROF. ARCHANA PATIL

SINHGAD INSTITUE OF MANAGEMENT, VADGAON (BK), PUNE

2018-2020
DECLARATION

I, Poonam Vyavahare, student of MBA from Sinhgad Institute of Management, Pune hereby
declare that, the project on “A study of financial planning of individual assesses” is submitted to
Savitribai Phule Pune University is the record of work done by me under the guidance of Prof.
Archana Patil in the partial fulfilment for the requirement of the award of degree of MASTERS
OF BUSINESS ADMINISTRATION.

This is the original work and has not been submitted to any other Institution for any other degree/
diploma / certificate in this University or any other University.

Place: Pune Poonam Sharad Vyavahare

ACKNOWLEDGEMENTS

I take this opportunity and privilege to express my deep sense of gratitude to Prof. M. N. Navale,
Honourable Founder President, Dr. (Mrs) Sunanda Navale, Founder Secretary, The Sinhgad
Technical Education Society, Pune and Dr Parag Kalkar, Director SIOM. They have been source of
inspiration to me and I am indebted to them for initiating me in the field of research.
I am deeply indebted to Faculty Member, SIOM, Prof. Archana Patil, my research guide at Sinhgad
Institute of Management, Pune, without whose help completion of the project was highly
impossible.
I take this opportunity and privilege to articulate my deep sense of gratefulness to Mr. Suhas Ingle
and the other staff for their timely help and positive encouragement.
I wish to express a special thanks to all teaching and non-teaching staff members of Sinhgad
Institute of Management, Pune for their continuous support. I would like to acknowledge all my
family members, relatives and friends for their help and encouragement.

Poonam Sharad Vyavahare

Place: Sinhgad Institute of Management, Pune
Date:
 SR. No. TOPIC Pg. No.

Executive Summary

1 Introduction
1.1 Introduction to Financial Planning
1.2 Importance of financial planning
1.3 Things to consider while doing financial planning
1.4 Investment options
1.5 Objectives
1.6 Scope
1.7 Limitations

2 Organization profile & insight of business

environment
2.1 Profile of organization
2.2 Business of organization
3 Review of literature

4 Research methodology
4.1 Topic of research
4.2 Period of research
4.3 Research design
4.4 Data collection method

5 DataAnalysis&Interpretation
5.1 Age wise analysis
5.2 Income wise analysis
5.3 Monthly savings
5.4 Investment made
5.5 Satisfaction of Investors
6 Observations, findings, suggestions
& conclusion.

7 Learning & contribution to organization.

EXECUTIVE SUMMARY

Priya Bihani & Associates is one of the growing and leading CA firm from Ahmednagar,
India. The company is headed by young entrepreneur with a prime goal to offer satisfactory
taxation and advisory solutions efficiently and cost effectively. The company was
incorporated in Dec, 2012 at Ahmednagar. Priya Bihani & Associates provide advisory
services with absolute range of services. They offer many of the services that are inevitable
for the success of business.

Financial planning is the process of assessing financial goals of individual, taking an

inventory of the money and other assets which the person have, determine life goals and then
take necessary steps to achieve goals in the stipulated period. It is a method of quantifying a
person’s requirement in terms of money.

It was a great opportunity to work with ADA Group, India’s leading business group. Reliance
Money a subsidiary of Reliance Capital is among top financial companies. We will get to
know the organizational structure and various business models of the company. The business
of Reliance Money can be broadly classified as Trading, Distribution and OTC Service.

Financial services refer to services provided by the finance industry. The finance industry
encompasses a broad range of organizations that deal with the management of money. Among
these organizations are banks, credit card companies, insurance companies, consumer finance
companies, stock brokerages, investment funds and some government sponsored enterprises.
Financial Planning is one such advisory service, which is yet to get recognition from
investors. Although financial planning is not a new concept, it just needs to be conducted in
organized manner. Today we avail this service from Insurance agent, Mutual fund agents, Tax
consultant, Equity Brokers, Chartered Accountants, etc. Different agents provide different
services and product oriented. Financial Planner on other hand is a service provider which
enables an individual to select proper product mix for achieving their goals.

The major things to be considered in financial planning are time horizon to achieve life goals,
identify risk tolerance of client, their liquidity need, the inflation which would eat up living
and decrease standard of living and the need for growth or income. Keeping all this in mind
financial planning is done with six step process. This are self assessment of client, identify
personal goals and financial goals and objective, identify financial problems and
opportunities, determining recommendations and alternative solutions, implementation of
appropriate strategy to achieve goals and review and update plan periodically.
CHAPTER 1: INTRODUCTION
1.1:Introduction to financial planning:

Income Tax Act, 1961 governs the taxation of incomes generated within India and of incomes
generated by Indians overseas. This study aims at presenting simple understanding of income tax
planning of an individual’s income in India .Income Tax Act, 1961 is the guiding baseline for all
the content in this report and the tax saving tips provided herein are a result of analysis of options
available in current market. Every individual should know that tax planning in order to avail all
the incentives provided by the Government of India under different statures is legal.

Website of Income Tax e filing: https://www.incometaxindiaefiling.gov.in/home

Definition of financial planning:

Financial Planning is the process of estimating the capital required and determining it’s
competition. It is the process of framing financial policies in relation to procurement, investment
and administration of funds of an enterprise.

1.2:Importance of financial planning:

1. Adequate funds have to be ensured.

2. Financial Planning helps in ensuring a reasonable balance between outflow and inflow of
funds so that stability is maintained.
3. Financial Planning ensures that the suppliers of funds are easily investing in companies
which exercise financial planning.
4. Financial Planning helps in making growth and expansion programs which helps in long-
run survival of the company.
5. Financial Planning reduces uncertainties with regards to changing market trends which
can be faced easily through enough funds.
6. Financial Planning helps in reducing the uncertainties which can be a hindrance to growth
of the company. This helps in ensuring stability and profitability in concern.

1.3:Things to consider while doing financial planning are:

Time Horizon and Goals: It is important to understand what individual’s goals are, and over
what time period they want to achieve their goals. Some goals are short term goals those that
people want to achieve within the year. For such goals it is important to be conservative in one’s
approach and not take on too much risk. For long term goals, however, one can afford to take on
more risk and use time to one’s advantage.

Risk Tolerance: Every individual should know what their capacity to take risk is. Some
investments can be more risky than others. These will not be suitable for someone of a low risk
profile, or for goals that require being conservative. Crucially, one’s risk profile will change
across life’s stages. As a
young person with no dependants or financial liabilities, one might be able to take on lots of risk.
However, if this young person gets married and has a child, person will have dependents and
higher

fiscal responsibilities. So persons approach to risk and finances cannot be the same as it was
when they were single.

Liquidity Needs: When does money is needed to meet the goal and how quickly one can access
this money. If investment is made in an asset and expects to sell the asset to supply funds to meet
a goal, then it needs to be understood how easily one can sell the asset. Usually, money market
and stock market related assets are easy to liquidate. On the other hand, something like real estate
might take a long time to sell.

Inflation: Inflation is a fact of the economic life in India. The bottle of cold drink that is brought
today is almost double the price of what would be paid for ten years ago. At inflation or slightly
above 4% per annum, a packet of biscuits that costs Rs 20 today will cost Rs. 30 in ten years
time. Just imagine what the cost of buying a car or buying a home might be in ten years time!
The purchasing power of money is going down every year. Therefore, the cost of achieving goals
needs to be seen in what the inflated price will be in the future.

Need for Growth or Income: As person make investments think about what is required, whether
capital appreciation or income. Not all investments satisfy both requirements. Many people are
buying apartments, but are not renting them out even after they take possession. So, this asset is
generating no income for them and they are probably expecting only capital appreciation from
this. A young person should usually consider investing for capital appreciation to take advantage
of their young age. An older person however might be more interested in generating income for
themselves.
1.4:Investment options:

1. Life Insurance:
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract
between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a
designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death
of
an insured person (often the policy holder). Depending on the contract, other events such as
terminal illness or critical illness can also trigger payment. The policy holder typically pays a
premium, either regularly or as one lump sum. Other expenses, such as funeral expenses, can also
be included in the benefits.

Factors to be considered before buying a Life Insurance policy:

Age and number of dependents

Annual income and annual expenses
Outstanding liabilities like home loan, car loan, etc.
Life style expenses, money required in future.

Specific factors that may be considered by underwriters include:

 Personal medical history;

 Family medical history;
 Driving record;
 Height and weight matrix, otherwise known as BMI (Body Mass Index)

Term insurance
Term assurance provides life insurance coverage for a specified term. The policy does not
accumulate cash value. Term insurance is significantly less expensive than an equivalent
permanent policy but will become higher with age. Policy holders can save to provide for
increased term premiums or decrease insurance needs (by paying off debts or saving to provide
for survivor needs).
Mortgage life insurance insures a loan secured by real property and usually features a level
premium amount for a declining policy face value because what is insured is the principal and
interest outstanding on a mortgage that is constantly being reduced by mortgage payments. The
face amount of the policy is always the amount of the principal and interest outstanding that are
paid should the applicant die before the final installment is paid.
Group life insurance
Group life insurance (also known as wholesale life insurance or institutional life insurance) is
term insurance covering a group of people, usually employees of a company, members of a union
or association, or members of a pension or superannuation fund. Individual proof of insurability
is not normally a consideration in its underwriting. Rather, the underwriter considers the size,
turnover, and financial strength of the group. Contract provisions will attempt to exclude the
possibility of adverse selection. Group life insurance often allows members exiting the group to
maintain their coverage by buying individual coverage. The underwriting is carried out for the
whole group instead of individuals.
Permanent life insurance
Permanent life insurance is life insurance that covers the remaining lifetime of the insured. A
permanent insurance policy accumulates a cash value up to its date of maturation. The owner can
access the money in the cash value by withdrawing money, borrowing the cash value, or
surrendering the policy and receiving the surrender value.
The three basic types of permanent insurance are whole life, universal life, and endowment.
Whole life
Whole life insurance provides lifetime coverage for a set premium amount (see main article for a
full explanation of the many variations and options).
Universal life coverage
Universal life insurance (ULl) is a relatively new insurance product, intended to combine
permanent insurance coverage with greater flexibility in premium payments, along with the
potential for greater growth of cash values. There are several types of universal life insurance
policies, including interest- sensitive (also known as “traditional fixed universal life insurance”),
variable universal life
(VUL), guaranteed death benefit, and has equity-indexed universal life insurance.
Universal life insurance policies have cash values. Paid-in premiums increase their cash values;
administrative and other costs reduce their cash values.
Universal life insurance addresses the perceived disadvantages of whole life namely that
premiums and death benefits are fixed. With universal life, both the premiums and death benefit
are flexible.
With the exception of guaranteed-death-benefit universal life policies, universal life policies trade
their greater flexibility off for fewer guarantees.

“Flexible death benefit” means the policy owner can choose to decrease the death benefit. The
death benefit can also be increased by the policy owner, usually requiring new underwriting.
Another feature of flexible death benefit is the ability to choose option A or option B death
benefits and to change those options over the course of the life of the insured. Option A is often
referred to as a "level death benefit"; death benefits remain level for the life of the insured, and
premiums are lower than policies with Option B death benefits, which pay the policy's cash value
—i.e., a face amount plus earnings/interest. If the cash value grows over time, the death benefits
do too. If the cash value declines, the death benefit also declines. Option B policies normally
feature higher premiums than option A policies.

Endowments

The endowment policy is a life insurance contract designed to pay a lump sum after a specific
term (on its 'maturity') or on death. Typical maturities are ten, fifteen or twenty years up to a
certain age limit. Some policies also pay out in the case of critical illness.

Policies are typically traditional with-profits or unit-linked (including those with unitized with-
profits funds).

Endowments can be cashed in early (or surrendered) and the holder then receives the surrender
value which is determined by the insurance company depending on how long the policy has been
running and how much has been paid into it.
Accidental death

Accidental death insurance is a type of limited life insurance that is designed to cover the insured
should they die as the result of an accident. “Accidents” run the gamut from abrasions to
catastrophes but normally do not include deaths resulting from non-accident-related health
problems or suicide. Because they only cover accidents, these policies are much less expensive
than other life insurance policies.

Such insurance can also be accidental death and dismemberment insurance or AD&D. In an
AD&D policy, benefits are available not only for accidental death but also for the loss of limbs or
body functions such as sight and hearing.

Accidental death and AD&D policies very rarely pay a benefit, either because the cause of death
is not covered by the policy or because death occurs well after the accident, by which time the
premiums have gone unpaid. To know what coverage they have, insureds should always review
their policies.
Risky activities such as parachuting, flying, professional sports, or military service are often
omitted from coverage.

Accidental death insurance can also supplement standard life insurance as a rider. If a rider is
purchased, the policy generally pays double the face amount if the insured dies from an accident.
This was once called double indemnity insurance. In some cases, triple indemnity coverage may
be available.

Senior and pre-need products

Insurance companies have in recent years developed products for niche markets, most notably
targeting seniors in an ageing population. These are often low to moderate face value whole life
insurance policies, allowing senior citizens to purchase affordable insurance later in life. This
may also be marketed as final expense insurance and usually have death benefits between
Rs.2,000 and Rs.40,000. One reason for their popularity is that they only require answers to
simple “yes” or “no” questions, while most policies require a medical exam to qualify. As with
other policy types, the range
of premiums can vary widely and should be scrutinized prior to purchase, as should the reliability
of the companies.

Health questions can vary substantially between exam and no-exam policies. It may be possible
for individuals with certain conditions to qualify for one type of coverage and not another.
Because seniors sometimes are not fully aware of the policy provisions it is important to make
sure that policies last for a lifetime and that premiums do not increase every 5 years as is
common in some circumstances.

Pre-need life insurance policies are limited premium payment, whole life policies that are usually
purchased by older applicants, though they are available to everyone. This type of insurance is
designed to cover specific funeral expenses that the applicant has designated in a contract with a
funeral home. The policy's death benefit is initially based on the funeral cost at the time of
prearrangement, and it then typically grows as interest is credited. In exchange for the policy
owner's designation, the funeral home typically guarantees that the proceeds will cover the cost
of the funeral, no matter when death occurs. Excess proceeds may go either to the insured's
estate, a designated beneficiary, or the funeral home as set forth in the contract. Purchasers of
these policies usually make a single premium payment at the time of prearrangement, but some
companies also allow premiums to be paid over as much as ten years.
 Life Stage in Life Insurance:

Peak earning age range. High asset creation & build up of liabilities.
Critical stage for

Introduction of dependents. Start of financial planning – balance

Asset between
base build asset reduced/ taken care of. Need for retirement planning more than
up & liabilities

No dependents/ liabilities therefore need for insurance Need for protection low. Greater need for regular income

25-30 45 yrs and above

Marrid couples with
30-45 no kids
years Matured
Couples with children
couple
18-25
(Unmarried) Retired

Endowment / ULIP’s + Term Annuities

Endowment / ULIP’s

At each stage, requirements, responsibilities and Financial Needs differ

 Objectives of the Project

 To identify investment habit of people.

 To understand financial planning done in India in respect of individual assesses.
 To study changes in financial planning with change in age.
 To identify various avenues for investment.
 To spread awareness of financial planning.
 To examine factors influencing investment decision.

Scope of the study

 This project studies the tax planning for individuals assessed to Income Tax.
 The study relates to non-specific and generalized tax planning, eliminating the need of
sample/population analysis.
 Basic methodology implemented in this study is subjected to various pros & cons, and diverse
insurance plans at different income levels of individual assesses.
 This study may include comparative and analytical study of more than one tax saving plans and
instruments.
 This study covers individual income tax assesses only and does not hold good for corporate
taxpayers

Limitations of the study:

Time availability: The period of internship was 2 months from 1 st June to 31st July . Time available for
learning was not sufficient
CHAPTER 2: ORGANIZATION PROFILE &
INSIGHT OF BUSINESS ENVIRONMENT
Profile of Organization

Established in the year 2005, “Priya Bihani & Associates.”, Chartered Accountants is engaged
in offering Advisory and Compliance services in the areas of Direct Tax, GST, Payroll
processing, Bank Audits, Trust Audits and other Compliances. The services offered by the
firm ensure that the diverse needs of its clients are achieved through efficiency, organization and
precise means. Their services are widely appreciated by the clients for its reliability and
appropriate results.

The team members are recruited after a stringent screening of their professional as well as
personal backgrounds. To make sure that the team members are kept updated with latest
techniques and requirements of the industry, we conduct training programs and practice sessions
on a regular basis under the supervision of a seasoned trainer.

Under the visionary guidance of our mentor, CA. Priya Bihani the firm has been able to render
the services at par with the global standards. Their constant guidance helps us in achieving a rich
client base, being able to stand effectively by their expectations at the same time.

Business of Priya Bihani & Associates:

Priya Bihani & Associates business can be broadly classified into three categories;

Advisory: Investment related, business related, wealth management.

Auditing: Bank Audits, Trust audits.

Taxation services: Individual tax returns, GST returns, tax audits.

CHAPTER 3: REVIEW OF LITERATURE:
Srivasta (2017) researched and found that there are variety of investment options available in the
market but a best investment option can be something which is beneficial to the individual
assessee from the point of view of tax saving and wealth creation in future
Suganya (2015) found and concluded that tax awareness measures are not significant. Workshop
on tax management has to conduct in practical manner such that the expenditure pattern of
money gets reduced.
Dev (2015) carried out a study to explain tax planning measures adopted by different salaried
class are almost uniform. Gender and experience wise assessees have no significant relationship
with the level of tax awareness.
Patil (2014) observed that majority of individual assessees are aware of the investment avenues
and make investments appropriately. The awareness amongst men is more as compared to
females. The study also revealed that there was no relationship between income leveland
awareness of investment avenues.
Geetha (2014) has investigated the differences in the savings and investment pattern of the
employees belonging to the private sector and public sector. Even if people have awareness about
tax planning, the implementation of tax planning measures adopted by the employees was not up
to the mark even by high tax slab groups. Employees showed greater awareness for PF,
insurance; Professional Tax and Housing Loan but have a lower awareness regarding capital
gains and relief.
Umamaheswari (2013) observed that the investors lacked awareness about the concept and
working of the investment pattern.
Deb (2013) observed that the most preferred tax savings investment was LIC-schemes because
of deduction available u/s 80C followed by ICICI Prudential which in turn creates wealth in
future in the form of lum sum principal amount and bonus.
Shetty (2013) empirically analysed and concluded that individual in order to reduce their tax
burden through tax planning does resort to tax saving investments. While investing, all the
benefits available in a particular investment are not known to individual investors they must
make all possible efforts to see that the terms of investment are known.
Sharma (2013) has studied the investment pattern amongst and also awareness level for
investment in the industrial securities, to find preferences & possibilities of new investment
avenues and in turn find the most popular investment avenue which creates wealth in hand.
Savita (2013) studied the options for investments for tax savings; the object of the study was to
find the most popular form of investment for tax savings. It was observed that investment by way
of premium paid for life insurance policy, followed by provident fund contribution and fixed
deposits savings were the most popular forms of investment. The paper also revealed that the
savings for tax purpose was the maximum in age group 50-60 and least in age group 20-30.
Manjunath (2015) has observed that lack of tax awareness, age group; income level and
occupation are the important influencing component of the attitude of individual assessees
towards tax savings instruments.
Chhajer (2013) has concluded that the primary reasons for individual assessee not achieving their
investment objectives are lack of tax saving investment knowledge, avoiding professional help of
financial advisors
CHAPTER 4:
RESEARCH METHODOLOGY
The purpose of methodology is to describe the purpose involved in the study. This include the overall
research design, the data collection method, etc. Research methodology refers to the various sequential
steps to be adopted by a researcher in studying a problem with certain object or objective in view.

AREA OF RESEARCH: Finance

4.1:Topic of research:
To study Tax planning for individual assesses.

4.2:Period of research:
1ts June 2019 to 31st July 2019

It is important for research to know not only the research method but also knows methodology. “The
procedures by which researcher goes about their work of describing. Explaining and predicting
phenomenon are called methodology”. Method comprises the procedures used for generating,
collecting and evaluating ta. All this means that it is necessary for the researcher to deign his
methodology for his problem as the same may differ problem to problem.

4.3:Research design-

It is used for this project is exploratory research in case of exploratory research, the focus is on
exploratory of ideas. An exploratory study is generally based on secondary data this readily available. It
does not have a formal rigid design as researcher may have to change his focus on direction, depending
availability of new idea and relationship among variables.

4.4:Data collection techniques and tools

For the purpose of data collection researcher took help of both primary data and secondary data
collection method.

Primary data are those, which are collected afresh and for the first time, and thus happen to be original
in character. This method was used by means of Personal Interview, wherein researcher had face-to-
face contact with the persons. The reason behind choosing this method was to have detailed information
on the subject. It also provided opportunity for selecting the sample for interview. The interview
conducted
were a mixture of structured and unstructured interviews. Scope was kept open for detailed discussion
at the discretion of the interviewee. Where there was a time crunch a structured procedure was followed
wherein predetermined questions were put forward.

The other method was adopted in primary data collection was Questionnaires. This was used to assist a
more structured form of information. The information thus obtained was standard and in a more
unbiased form. It assisted to collect data from a large sample size. The pattern adopted was a general
form of questionnaire. Questions are in dichotomous (yes or no answers), multiple choice and open
ended question. Open ended questions are restricted due to the difficulty faced in analyzing. The
questioner was kept short and to the point.
Secondary data means data that are already available i.e., the data which is already collected and
analyzed by other. To get a better understanding and to have a larger exposure on the subject this
method was used. Methods use was data available on world wide web, articles in newspapers, financial
industry reports, Financial Planning board of India reports and article, reports published by Government
of India, etc. Support was also provided by the project guide by giving inputs from his years of
experience.
Sample Design
Sample design was based on principles of sample survey. Sample was decided on socio demographic
factors such as income and age group. The number of respondent were restricted to 50 due to lack of
time. Sampling unit was geographical unit where the research was carried in Savedi, Ahmednagar.
Source list for respondents was not predetermined it was on random basis.

The various parameters on which the research was to be conducted are:

 Awareness of financial Planning
 Alignment of life goals and financial goals
 Investment distribution in various asset classes Decision influencing investment

Limitations

Lack of response from sample: It is also said as access to resource of information. As the method
adopted was cold calling the respondent were not easily available for discussion.
Unwilling to reveal financial position: In technical term it can be said as access to information. Many of
are not comfortable to disclose our financial affairs openly. In such a situation researcher had to
convince the respondent a lot more times. Also many a times only general discussion would take place.
Time: Due to lack of time availability of respondent and the period which can be used to collect data
was short the research could not be conducted on a large sample size.
Using organization (company) name: Many a time to get access to respondent researcher had to revel
the organization identity. People thought that it was for the purpose of sales of promotional activity,
which lead to negative response from many people.
Lack of expertise: On the side of the researcher the there was lack of in-depth information on the topic.
CHAPTER 5: DATA ANALYSIS
AND INTERPRETATION
1.Age distribution of respondent

Age group of respondent No. of respondents Percentage

21-30 27 54%

30-45 13 26%

45-60 7 14%

Above 60 3 6%

Total 50 100%

Table No. 5.1

Figure No. 5.1

Almost 60% of respondent was from 21-30yrs of age group this is considered to be most active age
group. During this age, life of an individual changes very drastically. The career is in growing stage
in starting few years and there are hardly any responsibilities, at this time there is a lot of funds
available for disposal. It is this age where maximum risk can be taken and a greater
period can be given to grow the amount invested. As a person enter into 30’s they have increased
family responsibilities and gradually the risk taking ability reduces with the age. With a greater
portion of population included in data collection a greater degree of understanding can be gained
how financial planning is done by young India.

2.Income distribution of respondent:

Income No of Respondents Percentage

Upto 2,00,000 20 40%

2,00,000-3,00,000 10 20%

3,00,000-4,00,000 12 24%

4,00,000-5,00,000 11 22%

Above 5,00,000 7 14%

Total 50 100%

Table No. 5.2

No of Respondents
20
16
12
8 No of Respondents
4
0
0 0 0 0 0
00 00 00 00 00
0 0, 0, 0, 0, 0,
2, ,0 ,0 ,0 5,
0
-3 -4 -5 e
to 0 0 0
ov
Up 00 00 00
0 0, 0 0, 0 0, A b
2, 3, 4,

Figure No.5.2
Financial planning is about assessing our present cash flows; estimating the required cash flow after
a certain period of time and to determine the steps required to achieve this over a period. The
amount of disposable at hand determines various investment decisions. It also helps in making tax
plans so that maximum benefit can be gained through various tax exemptions. So it is necessary to
know the income inflow of an individual. The above graph shows that a major portion of respondent
are in Rs.2,00,000-Rs.3,00,000 p.a.; this indicates that the persons may be in the beginning stage of
career. With increasing income slab the no. of respondent are reduced.

3.Monthly savings from the individual’s salary or income:

Income No. of respondents Percentage

Less than 20% 25 50%

Between 20%-35% 15 30%
Between 35%-50% 6 12%
Over 50% 4 8%
Total 50 100%

Table No:5.3

No. of respondents
25
20
15
10 No. of respondents
5
0
% % % 0%
20 -3
5
-5
0
r5
n % %
tha 2 0 3 5 O ve
ss en en
Le we we
t t
Be Be

Figure No:5.3
According to the respondent’s saving pattern where individual general save only less than 20%
from their salary or income generation, it is about 50% of the individual save their income after
completed their all expenses and save amount circulated in the financial avenues.
 4. Investments made by respondents various avenues:

Avenue No of respondents Percentage

Life insurance 50 100%

Fixed deposit 30 60%

Mutual fund 25 50%

Gold 20 40%

PPF 10 20%

Post office deposit 30 60%

Equity market 15 30%

Table No.:5.4

No of respondents
50
40
30
20 No of respondents
10
0
ce it d ld F it et
an p os fun Go PP p os ark
r l
su de tu
a de m
e in
x ed u ce u ity
Lif Fi M offi Eq
ost
P

Figure No.:5.4

A fair idea of asset allocation of individuals in various asset class can be observed through this. It
was observed that all respondent had a life cover policy. This shows that the basics of financial
financial planning were achieved.
 5. Satisfaction of investors on their previous investment

Satisfaction Respondents Percentage

Yes 15 30

No 28 56

Neutral 7 14

Total 50 100

Table No:5.5

Respondents

30

25

20 Respondents

15

10

0
Yes No Neutral

Figure No:5.5

A major portion of respondent was unsatisfied with the returns they got on their investment. This
reflects that investment decision was not taken properly. Few common reasons cited were:
Inadequate knowledge about the instrument in which investment was made
 Misguided by the agent of financial company
 Charges applicable were not disclosed initially
 Unplanned investment

Also a major portion of investment was in assets which has a low risk – low returns category.
This also was a major reason of respondent unsatisfied with current returns.
 6. Do respondent have enough time to manage their investment affairs

Time Available Respondents Percentage

Yes 18 36

No 32 64

Table No.: 5.6

Respondents

35
30
25 Respondents
20
15
10
5
0
Yes No

Figure No.: 5.6

It reflects that not many have time to do financial planning. In such cases it is mostly observed that
the investment decision was influenced by people around.
CHAPTER 6: OBSERVATIONS, FINDINGS,
SUGGESTIONS & CONCLUSIONS:
Observations:

While studying about the tax planning of individual assesses practically, it is found that many people do
not know about importance of filing the income tax returns and paying the taxes to government. I also
observed that some people invest in big assets like home for the benefit of tax or for tax saving.
Salaried employees are less bothered about the income tax filing due dates but the business man are
more concerned about the same because of the amount of taxes paid by them are very different.

Some people are required to pay advance income tax every quarter for the incone of the current
financial year by calculating expected income for the current year.

Government has various schemes for senior citizens like senior citizen saving scheme, bonds etc. to
invest their income and get some income over the same and also for making the money use in other
sector.

Suggestions:

After all this it can be stated that the fundamental corner stone’s of successful investing are as follows:

 Save regularly, invest regularly

 Start early
 Diversify
 Use tax shelter
 Keep a regular check on investment and modify plans.

All the documentations should be complete and need to be preserved. At time of maturity is is
necessary to produce the investment documents which act as a proof. But many times investors do not
have proper documents which dishonors the claim at maturity. It is also recommended that all the
disclosure documents also be preserved as it would help in case of any dispute in settlement.

People need to be educated and informed about Financial Planning and this provide a greater
opportunity to financial product distributor like ICICI securities, TATA mutual fund and reliance
money to educate people. Companies can arrange for seminars and sessions through which they can
provide information to people and in return can get prospective clients from the audience. In this way
both the audience and the company can also be benefitted.
Investment through SIP should be encouraged. A little amount regularly invested for long period can
create a greater wealth. SIP helps in Rupee cost averaging, develop habit of saving and it provides
convenience of investment.

Mutual funds could provide better advice to their investors through the net and through the traditional
investment routes where there is an additional channel to deal with the brokers. Direct dealing with the
fund could help the investor with their financial planning.

Conclusion:

The saving behavior has been changed considerably over the last couple of years. The saving rate in
India is comparatively higher than various other countries. Earlier the trend of saving was in terms of
physical assets but it has started to shift now to financial instruments. This trend partially reflects the
relentless expansion of the various branch networks of the financial institutions into the country’s rural
areas and partially hold the increasing trend of the easy accessibility of the alternative investment
opportunities. Today corporate securities has become a part of household savings wherein retail
individuals prefer to invest his savings in security market. The reason sited for this are the growth seen
in the stock market and a low interest rate and return offered by traditional instruments. Also the
growing income of working class has also contributed largely to the changing pattern of saving in India.

The household savings in India can be broadly categorized into the following types;

Saving in physical properties

Saving in financial instruments or financial household savings

Financial household savings in India usually include the following;

Saving deposits with bank

Life insurance policies
Provident funds
Pension funds

Liquid cash of households

Deposits with non banking financial institutions
Unit trust of India saving scheme
CHAPTER 7: LEARNING & CONTRIBUTION TO
ORGANIZATION:
The organization in which I worked for 60 days is a CA firm and its core functioning is in the area
of taxation, auditing and advisory services. I learned how to file the income tax of assesses.
Most important thing is which income is chargeable to tax, which income is tax free, in what ways a
person can invest so as to get maximum deduction in respect of tax.

My contribution to the organization is that I created awareness amongst some people who did not
know the importance of income tax filing and I started filing my income tax return also as NIL
return.
3.